The ongoing military conflict and strategic competition between major powers continue to evolve in complex ways. The situation is exacerbated by increasing risks to energy and food security, inflation, and disruptions in global supply chains. Unpredictable fluctuations in oil prices and the cost of raw materials for production are putting pressure on manufacturing enterprises, while domestic purchasing power remains low and consumers are tightening their spending.
BUSINESSES STRUGGLE TO OVERCOME CHALLENGES
Tan Quang Minh Production and Trading Co., Ltd. (Bidrico), a company that produces tens of millions of bottled beverage products for the domestic market annually, shared insights during the HCMC Foodex 2024 exhibition. Mr. Nguyen Dang Hien, General Director of Bidrico, revealed that import prices for raw materials, such as bottle packaging and fruit flavors, and the USD exchange rate have increased. Additionally, in July, the company might have to raise salaries for its 700 employees as per regulations.
Facing these challenges, the enterprise is scrutinizing its production processes and reducing costs to avoid price hikes in the upcoming period. “We’re looking for ways to cut production costs, minimize waste in raw material usage, and reduce expenses by rationally utilizing equipment and machinery,” shared Mr. Hien. “By minimizing machine downtime, we can also lower maintenance, upkeep, and cleaning costs.”
Similarly, Mr. Nguyen Anh Tuan, Deputy General Director of Colusa – Miliket, affirmed that the domestic market remains their primary focus. However, since the beginning of the year, the prices of raw materials have increased by 5-10%, with some even surging by 20%. “Market demand remains a concern for businesses. Hence, we’re formulating plans to conserve energy in production and striving to keep prices stable to support our customers,” said Mr. Tuan.
According to Mr. Nguyen Ngoc An, General Director of Vietnam Livestock Industry Joint Stock Company (Vissan), the company is facing pressure due to volatile input prices, including those of live pigs, packaging, and imported raw and auxiliary materials. With live pig prices expected to reach 70,000 VND/kg in the coming period, the cost of pork-based products will also rise. “Pork accounts for a significant proportion of our production costs. An increase in the price of this commodity will inevitably impact the selling price of our products,” Mr. An analyzed. However, the company is trying to keep prices stable or raise them slightly due to weak demand.
Regarding agricultural input prices, Mr. Nguyen Trung Dung, Chairman of the Board of Directors of Dh Foods, shared that procurement has been volatile this year, but the company has no choice but to accept it. “As our products are mainly distributed through supermarket channels, it’s challenging to adjust prices in line with input cost fluctuations,” Mr. Dung explained. “If we request a price increase, it won’t take effect until September or October 2024. Therefore, the best option is to offset the profit of one product with another, accepting a reduction in overall profit.”
Meanwhile, many supermarket systems are also trying to delay price hikes. Mr. Vo Tran Ngoc, Director of Business at Saigon Co.op, revealed that most vegetable and fruit suppliers have announced price increases of 10-15%. However, as a participant in the price stabilization program, Saigon Co.op proactively works with suppliers and signs agreements to guarantee supply. For processed food items, the requested price increase ranges from 10-20%. To cope, Saigon Co.op has negotiated with suppliers and stockpiled goods to ensure sufficient supply at reasonable prices…
The article was published in the Vietnam Economic Magazine, Issue 22-2024, released on May 27, 2024. We invite readers to access the full article at this link:
https://postenp.phaha.vn/chi-tiet-toa-soan/tap-chi-kinh-te-viet-nam
